1.1. Background of the study
Taxation to every country is bedrock for revenue generation which
when adequately carried out could lead to a speedy socio economic
development just like in the advanced nations of the world. Ariwodola
(2001) described tax as a compulsory levy imposed by the government
authority through its agents on its subjects or his property to achieve
some goals. Arnold and Mclntyre, (2002) define tax as a compulsory levy
on income, consumption and production of goods and services as provided
by the relevant legislation. Tax is a charge imposed by government
authority upon property, individuals, or transactions to raise money for
public purposes. This definition is however imperfect. The study of the
teachings of Christianity, Islamic and other prominent religions in the
world shows that tax is a religious duty based on social and civil
responsibilities (Agbetunde 2004). They all support and encourage tax
imposition either to redistribute wealth or to finance government
project. The Nigerian tax administration is in line with the British
model of tax administration since 1960 and has been operating this up to
1990 when the self-assessment scheme came into play which seems similar
to the American model of tax administration system (Adesola 2004). The
British model of tax administration assumes tax payers are incompetent
as to tax process and tax authorities do not rely on information
supplied by tax payers. Returns of the tax payer are carefully verified
through the application of the American model in reference to the rigid
British model. The American model despite the advantages that can be
derived from its application has not found a good place in Nigeria
because all the phenomenon that made it a success in America such as
voluntary compliance system, competence of tax payer, efficient data
processing system which aids detection of fraud are still not present
the Nigeria context. Consequently disadvantage has adversely impacted on
local government tax system since they are part of the ruling process
in the state. Such impact has generally been based on problems
associated with collection, assessment and returns procedures in the
local government area. There is doubt on how efficient the tax authority
and other bodies participating in the collection of tax and make
returns to the local and state government. In an economy like Nigeria
where great reliance is placed on one source of revenue by the state
government, the understanding and appreciation of the significance of
tax as a source of revenue is of paramount importance. This is not only
to enable one the opportunity to examine potential revenue generated in
the state but to enable the decision makers and government to appreciate
the need for administration changes within the context of tax system.
In this study, effort was made to assess Lagos State tax administration
system and how it could serve as a veritable tool for revenue generation
of the state. The result of the study shows that tax administration
affects the revenue generated by the government and that there is a
significant relationship between tax administration, tax policies and
1.2. Statement of the general problem
Ineffective taxation has greatly hampered Nigeria’s economic
development. Most advanced nations in the world today do not joke with
their taxation system as they have an effective tax system. There are
minimal cases of tax evasion in these nations and that why they are more
developed when compared with their African counterparts. Nigeria tax
policies have seen many organizations evade tax or pay less than what
they are supposed to pay which has greatly affected the internally
revenue generated to enhance development.
1.3. Objectives of the study
The following would be the aims and objectives of the study
- To compare Nigeria’s taxation system with other Nations of the world.
- To examine the effect of an effective taxation system.
- To identify ways Nigeria taxation system can be improved upon.
- To examine the implications poor taxing in Nigeria.
- To recommend ways of reducing tax evasion in Nigeria.
1.4. Research Questions
- What are the similarities and difference between Nigeria’s taxing system and their counterparts?
- What is the effect of having an effective taxation system?
- What are the ways our taxation system can be improved upon?
- What are the implications of poor taxing in Nigeria?
1.5. Research hypothesis
H0: Nigeria’s taxation system is not effective
H1: Nigeria’s taxation system is effective
1.6. Significance of the study
This study would be beneficial to the government in helping them
draft a holistic tax policy that would help boost revenue and ensure
development. This study would also be of importance to researchers and
students who are interested in Nigeria taxation system and its
comparison to other countries of the world.
1.7. Scope and limitation of the study
This study is restricted to the effectiveness of taxation in Nigeria in comparison with other nations of the world.
Limitations of the study
Financial constraint- Insufficient fund tends to
impede the efficiency of the researcher in sourcing for the relevant
materials, literature or information and in the process of data
collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously
engage in this study with other academic work. This consequently will
cut down on the time devoted for the research work.